FINRA And Social Media

Worth reading the complete PDF for guidance on blogs and social networking web sites.

FINRA Issues Guidance to Firms, Brokers on Communications with Public Through Social Networking Web Sites

Washington, DC — The Financial Industry Regulatory Authority (FINRA) today issued guidance to securities firms and brokers regarding the use of social networking Web sites such as Facebook, Twitter, LinkedIn and blogs to communicate with the public.

The guidance in Regulatory Notice 10-06, which is presented in Q&A format, clarifies the responsibilities of firms to supervise the use of social networking sites to ensure that recommendations are suitable and their customers are not misled. The Notice also addresses the recordkeeping and other responsibilities of firms.

"Social networking sites and blogs raise new regulatory challenges, particularly in the areas of supervision, advertising and books and records requirements," said FINRA Chairman and CEO Rick Ketchum. "Our goal in issuing this notice is to ensure that firms and brokers use social networking sites in an appropriate manner."

The notice emphasizes that each firm must develop its own policies and procedures — in the context of its own particular business model and compliance and supervisory programs — designed to ensure that the firm and its personnel are complying with all applicable regulatory requirements when using social networking sites. Some technology providers are developing systems that are intended to enable firms to retain records of communications made through social networking sites. As the Notice states, however, "FINRA does not endorse any particular technology to keep such records, nor are we certain that adequate technology currently exists."

Regulatory Notice 10-06 is a response to the expressed need for guidance explaining how FINRA rules governing communications with the public, recordkeeping and supervision apply to social networking sites. FINRA has previously issued guidance on the application of communications regulations to Internet communications in its Guide to the Internet for Registered Representatives, as well as in numerous podcasts.

FINRA - FINRA Issues Guidance to Firms, Brokers on Communications with Public Through Social Networking Web Sites

Comments

[Doug Cornelius]

Mike -

The report was useful to remind FINRA regulated parties that their existing rules apply to social media. Unfortunately, the rules make use of social media very difficult. More so for some platforms than others.

This new notice did not change the rules. It provided a few clarifications, but any avid user of social media would find the clarifications rather obvious.

Much of the difficulty comes from the inability for the Web 2.0 sites to allow proper archiving of information by user outside of the platform. I'm sure some vendors will step in and hopefully some of the platforms will open themselves for this kind of compliance activity.

[Chad Bockius]

As you dive into this issue you will see that it isn't just about archiving data. That is part of it but companies also need to think about access control, real-time moderation, discovery and reporting.

Firms interested in learning more should check out the Companion Guide to FINRA Social Networking Compliance http://bit.ly/8xT73y. It picks up where Notice 10-06 leaves off, offering additional detail on social networking considerations and a checklist of requirements for choosing a social networking compliance vendor.

From our experience companies need a solution that meets the letter of the law from FINRA but also provides capability to implement and manage their own social media policies. Of course these issues apply outside the financial arena as well.

Think about companies that simply adopt a social media policy and hope that employees follow it. The level of risk varies from industry to industry but companies need to consider the facts. Deloitte found in an Ethics & Workplace Survey that 49% of employees say a company policy won't change how they behave online.

There are tools now, like Risk Manager ( http://bit.ly/8z779Y ), that allow you to turn a social media policy, from a few pages that no one reads, into an automated system that scans posts in real-time, limits access to areas of social networking sites that are prohibited (i.e., games, videos, etc) and preserves all of the content related to the brand to ensure marketers get the greatest benefit from their investment in social media.

[Brian]

A much better solution can be found here
http://erado.com/social-media-archiving.html